Citation URL: http://www.urban.org/LorenRenz

This brief presents key findings from the latest report on the Foundation Expenses and Compensation Project –- the first large-scale, long-term, systematic study of independent, corporate, and community foundations' expenses and compensation patterns and the factors behind them. It documents how differences in type, size, and operating activities of foundations affect their finances and charitable administrative expenses. This brief highlights the key findings of the full report, "What Drives Foundation Expenses and Compensation?: Results of a Three-Year Study."

This study presents the findings of a three-year study to analyze the expense and compensation patterns of the 10,000 largest foundations in the United States. It finds characteristics such as foundation type, size, and operating activities are important factors for understanding differences in foundation finances. Despite the economic downturn and the volatility of the stock market during the study years (2001 to 2003), the patterns of foundation expenses and compensation are clear and consistent over time. This is the first large-scale, long-term, and systematic study of independent, corporate, and community foundations’ expenses and compensation patterns and the factors behind them.

This study documents how foundation characteristics such as giving amount, asset size and staffing, and activities such as international giving and operating a "charitable" facility or research program, affect the expense levels at the 10,000 largest independent, corporate, and community foundations. The report shows that most foundations report modest expenses; the vast majority are unstaffed; and many are run largely by unpaid trustees. Staffing is the most significant factor affecting expenses, regardless of type. The largest foundations tend to compensate at the highest amounts, but their median percentages of compensation to giving are among the lowest.

This interim report summarizes the findings to date from the Foundation Expenses and Compensation Study, a partnership of the Urban Institute, the Foundation Center, and GuideStar. Examining the expense and compensation patterns of the nation's 10,000 largest independent, corporate, and community foundations (by giving) circa 2001, this report documents how major differences in operating styles affect the expenses of philanthropic foundations. The findings suggest that, along with foundation type and size, the missions and goals of foundations that lead to different staffing levels and types of expenses should be considered when assessing foundation expenditures.

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